Like the S&P 500, the Nasdaq concluded May with a violation of the 200-day moving average, currently 7,520, notching consecutive closes under the trending indicator.

Tactically, notable resistance matches the bottom of the gap (7,507) and the 200-day moving average. A swift reversal higher would mark a step toward stabilization.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has violated the 200-day moving average, closing lower for the first time since March.

Perhaps as notably, the downturn punctuates a failed test of the breakdown point (7,670) from underneath. Bearish price action.

Tactically, an inflection point matches the December peak (7,486) and is closely followed by the 200-day moving average. On further strength, major resistance spans from 7,670 to 7,694 — also detailed on the hourly chart — and the next retest from underneath should be a useful bull-bear gauge.

The downturn resolves a modified head-and-shoulders top defined by the February, April and mid-May peaks.

The pattern’s neckline matches the March low (25,208) and pivots to resistance. To reiterate, a close atop this area would mark technical progress, signaling that bearish momentum is waning. (The Dow is currently rising from a modestly bullish relative strength index (RSI) divergence, unlike the other major benchmarks.)

On further strength, gap resistance (25,342) is followed by the 200-day moving average, currently 25,426.

Meanwhile, the S&P 500 has violated major support (2,800) and failed the initial retest from underneath. (Also see the hourly chart.)

More immediately, the S&P has narrowly maintained its next notable floor — the 2,738-to-2,742 area. Monday’s close (2,744) registered nominally higher, and Tuesday’s early upturn likely punctuates a successful retest.

The bigger picture

Collectively, the U.S. benchmarks have trended persistently lower, pressured amid trade tensions, as well as more recent regulatory concerns across the large-cap technology space.

In the process, broadly-based technical damage has been inflicted. While a corrective bounce is due, and apparently underway early Tuesday, the intermediate-term backdrop supports a bearish bias pending repairs.

Moving to the small-caps, the iShares Russell 2000 ETF has tagged four-month lows.

The downturn resolves a double top, the “M” formation defined by the February and May peaks.

Tactically, notable resistance matches the breakdown point, an area spanning from about 148.40 to 149.60. A swift reversal higher would place the brakes on bearish momentum.

Similarly, the SPDR S&P MidCap 400 has reached four-month lows.

Here again, the breakdown point pivots to resistance, an area spanning from about 335.14 to 337.34. The MDY’s initial retest from underneath is underway early Tuesday, and the next several sessions should add color.

Still, the SPY has ventured under the 200-day moving average (277.20) notching consecutive closes lower. (May’s final session, and June’s first session.)

A retest of the 200-day from underneath is currently underway. On further strength, notable resistance matches the former range top, circa 280.40. A close higher would strengthen the bull case.

Placing a finer point on the S&P 500, the index has maintained its next notable support (2,742).

To reiterate, a corrective bounce is overdue, and seems to be firmly underway Tuesday. The question now is the rally attempt’s quality.

When gauging the quality, initial overhead matches the 200-day moving average, currently 2,775. A close higher would mark progress, potentially punctuating a fleeting shakeout resembling the March downturn.

On further strength, more important overhead matches the breakdown point (2,800). This area capped last week’s rally attempt, and was punctuated by a “lower low” confirming the S&P’s prevailing downtrend.

All told, the S&P 500’s intermediate-term bias remains bearish, based on today’s backdrop, pending repairs. The eventual retest of the breakdown point (2,800) from underneath should be a useful bull-bear gauge. A close higher would signal waning momentum, strengthening the bull case.

Tuesday’s Watch List

The charts below detail names that are technically well positioned. These are radar screen names — sectors or stocks poised to move in the near term. For the original comments on the stocks below, see The Technical Indicator Library.

Drilling down further, bellwether large-cap technology names have been hammered, pressured amid reports that the U.S. will consider anti-trust action. The Justice Department will reportedly review Alphabet, Inc. while the FTC will evaluate Facebook and Amazon.com.

Tactically, the 200-day moving average roughly matches the March breakout point. A swift reversal higher would mark a step toward stabilization.

Charting U.S. sub-sector damage — The traditional sector leaders

Moving to U.S. sectors, the prevailing market downturn has inflicted damage to the traditional sector leaders. Consider the financials, transports and technology sector:

To start, the Invesco QQQ Trust
QQQ, -0.36%
— a large-cap technology sector proxy — has extended a damaging downturn from record territory.

In the process, the group has violated the 200-day moving average, an area roughly matching major support. Tactically, this area pivots to resistance, and the pending retest from underneath should be a useful bull-bear gauge.

Still, the XLF has violated several levels, including the major moving averages.

Tactically, the 200-day moving average (26.52) is closely followed by the 50-day moving average (26.88) and a retest from underneath is underway Tuesday. A swift reversal higher would strengthen the bull case.

To the extent the market eventually stabilizes, the financials are technically well positioned to outperform.

Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.

Still well positioned

The table below includes names recently profiled in The Technical Indicator that remain well positioned. For the original comments, see The Technical Indicator Library.

Company

Dow Jones Network

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